Beauty and personal care fuel billion dollar revenues for My Chemist and Priceline, Australian consumer confidence reaches highest level in two years, Boohoo.com on a roll, and cult and niche brands impact brand values of the big players.
Beauty and personal care fuel billion dollar revenues for My Chemist and Priceline
Prescription medicines remain the mainstay of the Australian pharmacy industry, providing 61.5 per cent of total sales. Yet, in spite of Australia's ageing population, the rising tide of health consciousness has slowed revenue growth. Beauty and personal care have become major drivers of sales growth for the major pharmacy chains and the trend shows no sign of slowing.
My Chemist Retail Group, Australia's largest pharmacy retailer, accounts for 20 per cent of industry sales. The company's two major brands - My Chemist and Chemist Warehouse - rely strongly on intense price competition and volume sales of cosmetics, skincare and health supplements.
Chemist Warehouse teamed with Tmall, the most popular e-tailer in China, to open its first international online store. A tidy little earner expected to achieve sales of $88 million in 2016. But with accelerated growth of 14.1 per cent, My Chemist Retail Group is expected to generate revenues of $3.1 billion by the end of the year.
Priceline has enjoyed similar success through its focus on personal care. The chain now accounts for 27 per cent of the Australian beauty market. Priceline is not growing as strongly as My Chemist, says IBISWorld. But annualised growth of 1.0 per cent this year will lift sales to $1.6 billion. As pharmacies face increased pressure from supermarkets and other non-pharmacy outlets who are now able to sell pharmacy products, the researcher expects both pharmacy groups to intensify their marketing emphasis on beauty.
Australian consumer confidence reaches highest level in two years
A strong GDP report has lifted the nation's mood, reveals the ANZ-Roy Morgan report. Consumer confidence rose 3.2 per cent to 116.8 last week, the highest level since January 2014. A more positive view of economic conditions over the next 12 months caused sentiment to bounce upwards by a strong 7 per cent, says the researcher. An upbeat assessment of the economy that extends to 2021, with consumer confidence rising 3.5 per cent for the five year period.
Continued improvement in the housing market and the recovery of non-mining activity has had a strong impact, notes Felicity Emmett, ANZ Head of Australian Economics. "The improvement in views around household finances is encouraging for the outlook for consumer spending," she says. "It has occurred alongside an improvement in the housing market, with prices and auction clearance rates showing an improvement in recent months. This, in turn, will help to further support confidence and spending."
Boohoo.com on a roll
Many of the world's leading luxury fashion brands are doing it tough. It's a different story at the other end of the price spectrum. Boohoo.com, the British online fashion retailer which is hugely popular in Australia, has raised its full year forecast after first quarter sales exceeded analysts' expectations.
The company targets younger Millennials aged 16 to 24 through its own-brand clothing, shoes and accessories. Thanks to attracting a horde of new customers in the UK and overseas in the three months to May 31, Boohoo's revenues rose 41 per cent over the period to $AUD114.4 million. A bullish performance which has prompted the company to raise its expected sales performance to $AUD491.34 million for the current year - a growth rate of 25 to 30 per cent.
Boohoo currently boasts 4.2 million customers around the world, a surge of 30 per cent year-on-year. An enviable position in the retail landscape, note analysts. The company also announced it would invest heavily to attract new customers and grow internationally.
Cult and niche brands impact brand values of the big players
It came as no surprise that L' Oréal again cemented its ranking as the world's most valuable brand in the 2016 BrandZ Top 100 Most Valuable Global Brands list. The French giant's estimated worth rose to $US23.5 billion, buoyed by a raft of new products and continued investment in digital and online marketing. The growing importance of a great smile pushed Colgate into the number two spot. Toothpaste and manual toothbrush sales in North and South America lifted the brand's value to $US18.3 billion.
The other big names comprising the top 15 personal care brands in the value stakes were: , Lancôme , , Garnier, , , , Olay, Pantene Pro-V, Crest, , and Pond's.
But the most interesting takeaway from the rankings this year was that the combined value of the big guns has flatlined. According to BrandZ, smaller niche brands have harnessed e-commerce to drive sales, and mobile access continues to give Millennials wider access to new brands.
Money talks, of course, and the challenge from the newcomers may not go the distance, says Doreen Wang, Global Head of BrandZ. "The big legacy brands have the scale and resources to develop mobile-based purchasing solutions, but they need to combine this with greater differentiation, catering to the specific needs of the widest possible range of consumers." A strategy they have adopted and are pursuing vigorously.
Snippets from the wires
- Some sponsors have stood by Maria Sharapova. But has ended the tennis ace's tenure as the face of its Luck fragrance. The company says that the decision has nothing to do with the Russian beauty's failed drug test and two year ban.
- Unilever Ventures, the invesment arm of Unilever, has invested $AUD975,000 in blow LTD, one of Europe's leading blow dry services company. Since its 2013 debut, the company has beautified the tresses of 700,000 customers.
- The global luxury slowdown has hit tax-free sales, says Global Blue, the travel retail tracker. In April, European revenues dipped 16 per cent for the month, and Asian sales slumped 10 per cent.
- Pharmacy chains filled three out of the top 10 slots in the 2016 Fortune 500 list of the largest companies in the US by revenue. Walmart, the world's largest retailer, led the trio with $US24 billion in pharmacy sales. McKesson, the biggest pharmaceutical distributor, scored a number five placing with sales of $US181.24 billion. CVS Health claimed the number seven ranking with a revenue spike of 10 per cent over the past year to $US153.29 billion.
- Facebook held its first beauty summit in LA recently. According to the social media giant, three in every 10 beauty and personal care purchases in the US were completed via mobile in the first quarter of 2015. The golden opportunity, says Facebook, is impulse purchases of eyeshadows and lip products.
Newsletter image: Instagram.com/dogsanddresses
